A financing statement sufficiently indicates the collateral that it covers if the financing statement provides:

(1) a description of the collateral pursuant to Section 55-9-108 NMSA 1978; or

(2) an indication that the financing statement covers all assets or all personal property.

History: 1978 Comp., § 55-9-504, enacted by Laws 2001, ch. 139, § 75.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

1. Source. Former section 9-402(1).

2. Indication of Collateral. To comply with section 9-502(a), a financing statement must "indicate" the collateral it covers. A financing statement sufficiently indicates collateral claimed to be covered by the financing statement if it satisfies the purpose of conditioning perfection on the filing of a financing statement, i.e., if it provides notice that a person may have a security interest in the collateral claimed. See section 9-502, comment 2. In particular, an indication of collateral that would have satisfied the requirements of former section 9-402(1) (i.e., "a statement indicating the types, or describing the items, of collateral") suffices under section 9-502(a). An indication may satisfy the requirements of section 9-502(a), even if it would not have satisfied the requirements of former section 9-402(1).

This section provides two safe harbors. Under paragraph (1), a "description" of the collateral (as the term is explained in section 9-108) suffices as an indication for purposes of the sufficiency of a financing statement.

Debtors sometimes create a security interest in all, or substantially all, of their assets. To accommodate this practice, paragraph (2) expands the class of sufficient collateral references to embrace "an indication that the financing statement covers all assets or all personal property." If the property in question belongs to the debtor and is personal property, any searcher will know that the property is covered by the financing statement. Of course, regardless of its breadth, a financing statement has no effect with respect to property indicated but to which a security interest has not attached. Note that a broad statement of this kind (e.g., "all debtor's personal property") would not be a sufficient "description" for purposes of a security agreement. See sections 9-108 and 9-203(b)(3)(A). It follows that a somewhat narrower description than "all assets," e.g., "all assets other than automobiles," is sufficient for purposes of this section, even if it does not suffice for purposes of a security agreement.

Repeals and reenactments. — Laws 2001, ch. 139, § 75 repealed former 55-9-504 NMSA 1978, as amended by Laws 1985, ch. 193, § 36, and enacted a new section, effective July 1, 2001.

Decisions under former 55-9-402 NMSA 1978. — In light of the similarity of this section and former Section 55-9-402 NMSA 1978, annotations decided under former 55-9-402 NMSA 1978 have been included in the annotations in this section.

Description insufficient. — Where a financing statement listed all major assets of the debtor, who was a commercial grower of cut roses, with complete and exact descriptions, the description of some collateral as "miscellaneous equipment" was not sufficient to put third parties on notice that the creditor claimed a security interest in 60,000 rose bushes which were one of the debtor's major assets and the creditor's security interest in the rose bushes was not perfected. In re Flores de N.M., Inc., 151 B.R. 571 (Bankr. D.N.M. 1993).

Description sufficient. — Where a financing statement described some of the collateral as "miscellaneous equipment," the description was sufficient to place a third party on notice that the creditor claimed a security interest in a prefabricated portable office building and in a computer system that were used in the debtor's commercial cut rose business, because the office building and computer system were not substantial assets and were of the type of item which might be reasonably grouped in a catch-all paragraph and labeled "miscellaneous equipment." In re Flores de N.M., Inc., 151 B.R. 571 (Bankr. D.N.M. 1993).

Security agreement must cover disputed items. — Although the filing of the financing statement was sufficient to put defendants on inquiry as to plaintiff's security interest, this avails plaintiff nothing when the security agreement did not cover the disputed items. Jones & Laughlin Supply v. Dugan Prod. Corp., 1973-NMCA-050, 85 N.M. 51, 508 P.2d 1348 (decided under former law).

"Inventory," "equipment" and "supplies" sufficient to describe collateral. — The terms "inventory," "equipment" and "supplies" are sufficient to meet the requirement that collateral must be described in general language reasonably describing the items. Waterfield v. Burnett (In re Burnett), 21 B.R. 752 (Bankr. D.N.M. 1982) (decided under former law).

Language in financing statement fails to satisfy section. — The words "all assets . . . regardless of type or description now owned . . . or to be bought in the future . . ." in a financing statement fail to satisfy the requirements of this section. The language is too general and vague to fulfill the demand that the financing statement at least reveal "the type" of collateral. The language is misleading and does not give subsequent secured parties adequate notice of a security interest in inventory and accounts receivable. Mogul Enters., Inc. v. Commercial Credit Bus. Loans, Inc., 1978-NMSC-081, 92 N.M. 215, 585 P.2d 1096 (decided under former law).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 68A Am. Jur. 2d Secured Transactions § 288 et seq.

Effect of recording chattel mortgage in town or county to which the mortgagor subsequently removed, 1 A.L.R. 1662.

Omission of amount of debt in mortgage or in record thereof as affecting validity of mortgage, its operation as notice, or its coverage with respect to debts secured, 145 A.L.R. 369.

Construction and application of statutory provision respecting registration of mortgages or other liens on personal property in case of residents of other states, 10 A.L.R.2d 764.

Conflict of laws as to chattel mortgages and conditional sales of chattels, 13 A.L.R.2d 1312.

Attorney's liability for negligence in preparing or recording security document, 87 A.L.R.2d 991.

Necessity and sufficiency of notice or statement prescribed by factor's lien law, 96 A.L.R.2d 727.

Sufficiency of description in chattel mortgage as covering all property of a particular kind, 2 A.L.R.3d 839, 30 A.L.R.3d 9.

Sufficiency of description of collateral in financing statement under UCC §§ 9-110 and 9-402, 100 A.L.R.3d 10.

79 C.J.S. Secured Transactions § 53 et seq.